Understandably, many of us want financial freedom and the extra choices in life that it brings. But, most Australians – despite living in one of the most affluent countries in the world – never achieve financial independence. In fact, most Australians retire just above broke.
It’s the reason why so many Australians give up their jobs and start their own small business. But, of those, very few actually make a financial success of it. This desire for financial freedom is also the reason why close to 1.7 million Australians have become involved in property investment. Of those investors, 92% of them never get to own more than two properties. Which, unfortunately, is why the majority of property investors never achieve financial freedom either.
OK, So How Do You Achieve Financial Freedom?
Here’s what’s interesting: according to the latest Merrill Lynch-Capgemini Wealth Report, close to 80% of Australia’s high net worth individuals created their wealth as a business owner. A large portion of the remaining successful individuals were employees who treated their investments like a business.
Let’s clarify, of those who do achieve financial freedom, the majority are successful business owners. What this means, is that one of the absolute best ways to earn more and work less is by owning a business. This is quite simply, because Australia’s tax system favours business people and disadvantages employees. A successful business owner has the system of finance, tax and the law working for them.
Here’s the Difference, And It’s Big
The average employee earns money, pays tax and spends what’s left over. A business owner earns income, spends money and pays tax on what is left. As an employee you have to pay for your lifestyle needs with after-tax dollars. But, a business owner can buy a car, take a trip and pay for other such expenses with before-tax dollars (if it is used for business and meets certain requirements).
How Does This Relate to Property Investment?
If you are looking to become a property investor, even an owner occupier, you need to be looking at your property purchase like a business. Facts show, many property investors who treat their investment like a business achieve great wealth and success by growing a multi-million-dollar investment property portfolio. Don’t forget, at some point even they started with a first purchase.
They achieve this success by understanding the system, getting the right type of finance, setting up correct ownership and asset protection systems and (most importantly) knowing how to legally use the taxation system to their advantage. The beauty of this, is that you don’t always have to be a business owner to achieve financial freedom. If you buy a home and you treat that investment like a business, you have the ability to become financially free too. Every person, whether they are an employee or self-employed, is able to set up a property investment business.
In fact, that’s how almost every single wealthy property investor has achieved success. They built their wealth one property at a time. While growing their property portfolios, they lived off the income that they earned in their day job. They started with one property, leveraged off its capital growth to invest in another and another, until one day they discovered themselves to be a true property investment business. And, financially free.